Federal Legislation

Rural Hospital Funding to be Cut by Billions in the Big Beautiful Bill Act

• On June 12, four US senators sent a letter to the President, the Speaker of the House, and the Senate Majority Leader regarding the implications the Budget Reconciliation Bill could have for rural communities, such as their access to healthcare and their hospitals. Citing data from the Sheps Center, the letter describes the state of at-risk rural hospitals per state, noting that 83 rural hospitals are at the highest level of financial risk. In a separate analysis relying on the same Sheps Center data, the American Hospital Association (AHA) estimates that rural hospitals could receive $50.4B less in federal Medicaid spending over a decade, with 1.8 million Medicaid enrollees in rural areas losing coverage by 2034, if the budget reconciliation bill passes as written. Rural hospitals in Kentucky and California, which currently have the most rural residents expected to lose coverage, could experience upward of $1B in federal Medicaid reimbursement cuts (Inside Health Policy, June 16; Markey, June 12).

Healthcare Bill Aims to Reverse ‘Silver Loading’ but Raises Coverage Concerns

• The Senate Health, Education, Labor and Pensions Committee proposed restoring cost-sharing reduction (CSR) payments, which lower out of pocket costs for low-income exchange enrollees. These payments were cut in 2017, leading insurers to raise Silver plan premiums in a practice called “silver loading.” While restoring CSRs would cut Silver premiums by 12%, it would reduce premium tax credits, raising costs for Bronze and Gold plans. The Congressional Budget Office (CBO) estimates about 300,000 people could lose coverage, mostly middle-class families, with some facing premium increases of around $1,573 per year. The government would save $25.4B over 10 years. Democrats, including Senator Bernie Sanders, criticize the bill’s rushed process and warn it may hike premiums and reduce coverage (Modern Healthcare, June 11).

Democrats Challenge GOP’s Medicaid Cuts with Focus on Fraud and Access

• On June 12, 2025, Senate Democrats introduced a package of healthcare bills in response to the One Big Beautiful Bill Act (OBBBA) of 2025, which proposes over $1T in healthcare cuts, primarily from Medicaid. While Republican lawmakers say OBBBA targets waste, fraud, and abuse, Democrats warn the reconciliation bill could leave around 11 million people uninsured, citing Congressional Budget Office estimates. While Democratic lawmakers are unable to block passage of the reconciliation bill, their package of legislation highlights an alternative approach to oversight, access, and fraud prevention.

Key Democratic bills include:

• The Health Care Fraud and Abuse Control Act—focuses on boosting funding for antifraud enforcement in Medicaid, Medicare, and other related programs
• The Keeping Obstetrics Local Act—funds rural maternity care to improve access
• The Easy Enrollment in Health Care Act—helps people sign up for coverage through their tax filings (Modern Healthcare, June 12).

 CMS Ordered to Submit Medicaid Data to the DHS

• On June 10, the Department of Homeland Security (DHS) ordered federal Medicaid officials to submit datasets with personal data for individuals living in California, Illinois, Washington, and DC. This directive follows President Trump’s Executive Order, “Ending Taxpayer Subsidization of Open Border.” The Associated Press was able to obtain an internal memo and emails and found that CMS officials were given only 54 minutes to comply. The dataset is said to include names, addresses, social security numbers, and immigration status and was subsequently handed over to the Department of Homeland Security (DHS). Stakeholders, including the National Health Law Program (NHeLP), have raised concerns about the civil infringement that this decision brings about, such as the provision of confidential health information, and the usage of this data for immigration raids. California, Illinois, Washington, and DC currently offer coverage to undocumented immigrants. Colorado, Minnesota, New York, and Oregon also provide coverage to this population but have not yet been asked to submit data (Associated Press, June 14; Inside Health Policy, June 13).

HHS Moves to Rehire over 450 CDC Employees

• Following their mass layoff in April, the Department of Health and Human Services (HHS) is rehiring over 450 employees within four CDC divisions: the National Center for HIV, Viral Hepatitis, STD, and Tuberculosis Prevention (NCHHSTP), the National Center for Environmental Health (NCEH), the Immediate Office of the Director (IOD), and the Global Health Center (GHC) (Fierce Healthcare, June 12).

Senate’s Medicaid Reconciliation Bill Targets Deep Cuts and Stricter Rules

• The Senate Finance Committee released its section of the budget reconciliation bill on June 16. The Senate language makes key changes to the House version, including phased reductions to provider taxes and state directed payments. The Senate version also removes some provisions included in the House bill, including language around PBM reform, and adjusts effective dates for Medicaid work requirements and some other provisions. The bill must clear procedural hurdles before consideration before the full Senate (Inside Health Policy, June 16).

Key Bill Highlights:

Policy Changes

• The Senate bill removes the House bill’s physician payment relief and cancels the proposed expansion of Medicare drug negotiation exemptions for orphan drugs.

Provider Taxes

• States that expanded Medicaid would need to gradually reduce their provider tax limit from 6% to 3.5% by 2031, decreasing by 0.5% each year starting in 2027.
• Non-expansion states would have provider tax rates frozen, similar to the House bill’s freeze and ban on new taxes.

State-Directed Payments

• Expansion states would see a 10% yearly cut in provider payments until they match Medicare rates.
• The House bill allows non-expansion states to pay up to 10% more than Medicare and would lock in existing higher payment levels.

Cost Sharing

• The House bill exempts primary care, mental health, and substance use services from cost-sharing rules.
• The Senate bill expands these exemptions to also include emergency services, pediatric care, and prenatal care, meaning no co-pays would be required for these services starting in 2027.

Retroactive Coverage

• The House version limits retroactive Medicaid coverage (which helps pay for care before formal enrollment) to 30 days.
• Retroactive coverage would be limited to 1 month for expansion states and 2 months for non-expansion states.

Work Requirements

• Both bills require adults under age 65 in the Medicaid expansion group to report monthly whether they’ve completed 80 hours of work or community engagement.
• The Senate narrows exemptions to parents of children under 15, compared to the House’s broader exemption for any parent with a dependent child.
• The Senate also outlines four “good cause” exceptions such as hospitalization or traveling long distances for medical care that allow states to temporarily waive the requirement.

Funding

• The bill allocates $50M to the Department of Health and Human Services (HHS) and $100M to states to help roll out and manage the new work requirements. States would receive funding based on the proportion of affected enrollees they have.

Sellers Dorsey has compiled a detailed summary of the Medicaid-related provisions in the H.R. 1 – One Big Beautiful Bill Act with regular updates forthcoming. View the summary.

Federal Studies and Reports

MACPAC Releases June 2025 Report Highlighting Support Needed for Vulnerable Populations

• On June 11, MACPAC published a report to inform Congress and subsequent federal agencies of their recommendations on key Medicaid and CHIP populations. The report is split into five chapters, each highlighting a key service type or program and recommendations going forward. Topics explored in this report are children and youth with special heath care needs (CYSHCN), children’s residential behavioral treatment, medications for opioid use disorder (MOUD), program of all-inclusive care for the elderly (PACE), and home and community-based services (HCBS). MACPAC looks to Congress to publish clear guidance and better means of data collection to inform intervention methods that states can deploy (MACPAC, June 11).

Sellers Dorsey experts created a high-level summary of the MACPAC report, providing key takeaways from all five chapters. View the summary.